Monthly Archives: September 2017

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FINRA made the news earlier this month when CEO Robert Cook appeared during a House Subcommittee Hearing. Pertinent to the meeting was the organization’s transparency and financial affairs. Lawmakers such as Republican Tom Emmer from Minnesota and Democrat Brad Sherman from California took the opportunity to question Cook on FINRA’s practice of retaining fine proceeds rather than giving that money to investors harmed by broker misconduct. Mentioned during the proceedings were FINRA’s $1.6 billion reserve fund, executive pay, and inquiries on how fine money was spent. Continue reading →

The circumstances that create a need for Inherited IRAs are never ideal. However, as they inevitably come about, and because Inherited IRAs can be complex, it is important to have a general understanding of how they work and what your options are as a beneficiary to one. Continue reading →

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In celebration of the HeLP Legal Services Clinic’s 10th Anniversary, the Georgia State University College of Law hosted a reception on September 14, 2017. HeLP Clinic alumni, along with College of Law students, faculty, staff, and other esteemed members of the bar and Atlanta community came together to celebrate a decade of service and inter-professional collaboration.

The SEC recently issued an Investor Alert about Public Companies Making ICO-Related Claims, as did FINRA in an Investor Alert entitled Initial Coin Offerings: Know Before you Invest. Some startup companies looking to raise capital are using initial coin offerings (ICOs) by creating a new virtual coin or token that the company offers for sale using technology similar to the bitcoin network that creates and tracks transactions in virtual currency. Similarly, ICOs are also conducted online where purchasers can use U.S. currency (such as the U.S. dollar) or virtual currencies (such as bitcoin) to pay for the ICOs. It is important to note that if the offer and sale of these coins and tokens in an ICO is a security offering, then the ICO must be registered with the Securities and Exchange Commission (SEC) and is subject to the federal securities laws unless they qualify for an exemption from registration. In order to be exempt from registration, offerings are limited to accredited investors that typically meet certain net worth thresholds in excess of $1 million or maintain certain income levels to be eligible to invest. Continue reading →

Earlier this year, the SEC announced fraud charges against a Michigan pastor. The pastor, and owner of a real estate company, allegedly targeted members of his congregation, along with laid off auto workers, promising to roll their money into IRAs and invest in his company. The pastor allegedly collected 6.7 million from over 80 investors, even though he was not registered to sell securities, guaranteeing high returns and inflating the value of his real estate company. The SEC says he allegedly invested none of the 6.7 million, scamming groups in his community who entrusted their money to him.

Unfortunately, these allegations sound like affinity fraud, an all too common issue. In affinity fraud, fraudsters prey on groups, such as religious organizations, the elderly, immigrants, retirees, and ethnic groups. Often, they are a group member or they use a trusted member to recruit potential investors, the scam even unbeknownst to the friend “spreading the word.” Affinity fraud is also gaining online presence, with fraudsters using social media sites to target online groups. According to the SEC, most affinity fraud surfaces as Ponzi or pyramid schemes, soliciting fake investments for personal use. Due to the nature of these “affinity” scams, the damaged often investors opt out of reporting the fraudster, preferring to handle it within the group.

Among affinity fraud’s characteristics, the SEC warns investors to look for “red flags” such as “spectacular or guaranteed returns.” For tips on how to avoid affinity fraud visit the SEC and FINRA.

By Michael Williford, Fall 2016 Student InternMy experience in the Investor Advocacy Clinic has provided me the greatest joy when I get to interact with clients. The Clinic setting provides the unique opportunity to apply law school lessons to real-world legal issues. Interacting with the client reminds me that the practical experience students covet has consequences for regular citizens. Clients don’t turn to the IAC because everything has gone according to plan in their retirement investments; they turn to the Clinic because they’ve lost a portion of what they’ve worked hard to earn. It’s a pleasure to help them recoup some of those losses.

Apply for the Spring 2018 clinic class here. Applications are due 9/27.